With the fourth post of the day, there must be something in the air!  But I just couldn’t let the chance pass by to write about my favorite “character” from my college days at BYU.  Does anyone else remember the famous Barry Minkow? Does the name “ZZZZ Best” ring a bell?

In the early 1980’s, Barry Minkow (16) started a small carpet cleaning business in California.  This developed into an insurance restoration business.  Eventually, in 1986, Barry became the youngest person in American history to take his company public.  He was featured on national tv, lectured at business schools, and the Los Angeles mayor declared a Barry Minkow Day!  When his company fell apart amid buyout negotiations, it was worth over $230M… and it was all a fraud!  

I remember watching a prison interview where Barry explained the tactics he used to manipulate the auditors: cut and pasting all night to make fake invoices, arguing he would take his business to PWC, and torching other offices then creating fake restoration contracts.  He even took a sideways picture of a building they were supposedly restoring (they had a fake contract for a seven-story building, but the tallest building in the city was only four-stories).  It was found later that his initial loans were from the Mafia and he used several buildings for narcotics money laundering.  

Well, today the WSJ is running an article involving Barry - on the other side!  It seems that once he got out of jail, he started a fraud investigation company… and now he has accused Lennar Homes of fraud and questionable business practices.  This caused their stock to drop 28% (he was shorting it), and they have filed a libel suit against him.  Despite my skepticism of Barry, I kind of feel like this is justice being served to a company that helped create to the mortgage mess we are in.  Besides, he’s ZZZZ Best!

Last 3 posts by Eric B.

• Nassim Taleb on the Economy - June 25th, 2010
• Full Circle - May 3rd, 2010
• The Dark Side :) - April 5th, 2010